TY - JOUR T1 - Risk Management and Risk Transfer:<br/> <em>Distributive Justice in Finance</em> JF - The Journal of Alternative Investments SP - 90 LP - 98 DO - 10.3905/jai.2011.13.4.090 VL - 13 IS - 4 AU - Robert W. Kolb Y1 - 2011/03/31 UR - https://pm-research.com/content/13/4/90.abstract N2 - Questions of distributive justice in risk management arise with varying intensity in different market settings. This article argues that perfect financial markets provide a context in which questions of distributive justice are seldom salient. In such markets, all traders have access to the same information about the item being traded, and traders are generally anonymous. For the most part, the author argues, these conditions justify ignoring questions of distributive justice. In imperfect markets, managing risk becomes relevant to distributive justice. Differential information between trading parties can quickly lead to a situation in which one party exploits another, particularly when the advantageous information is gained via a privileged position or illegitimate means. As the degree of market imperfections increases, so does the importance of considerations of distributive justice. In nonfinancial markets generally, and in labor markets particularly, a firm’s efforts to manage risk often affect others in ways that may be unjust. Finally, firms’ risk management activities can create risks for parties far beyond those who actually manage the risk or participate in the risk management process. These affected parties can even include the public at large.TOPICS: Financial crises and financial market history, risk management ER -